Currency union nations tidy central bank loans to fit new rules

Four GCC countries planning to adopt a common currency will take another step towards that goal by selling off central bank loans made to public companies, according to media reports.

Al Riyadh, a Saudi daily newspaper, said yesterday that the central banks of Saudi Arabia, Kuwait, Qatar and Bahrain would liquidate loan portfolios to the public sector. The draft monetary agreement prohibits central banks from lending to public-sector companies.

The move is meant to free a future central bank from subsidising the public sector in individual countries.